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International management in the chinese market (2009)

Résumé de l'étude de cas

We present the case of the entry of eBay on the Chinese market and discuss the company's strategy. The case pertains to the period between 2002 and 2006, during eBay's entry on the Chinese market when it had adopted several different strategies in order to tap and snatch a share of the Chinese market.
When eBay decided to enter the Chinese market, the company decided to adopt a gradual and careful expansion strategy. The main reason why eBay decided to tap the Chinese market was because China represented a huge opportunity to develop the company's business aboard by its growing economy and also because the Chinese market has a huge potential with its 250-million-strong emerging middle class. However, the company was aware of some risks that the Chinese market represented. Indeed, at this time the Internet technology was not really well-established in the country and this caused some problems related to low internet speeds, high Internet access costs, and imbalanced economic and technological development in different Chinese regions. Moreover, as it was still a new technology, there was the absence of a reliable credit system for online payment. The Chinese government also resulted in some problems regarding regulations. Other factors were also taken into account. Indeed, the country had to tackle issues of corruption, currency problems as well as a lack of transparency and an adequate legal system to protect the interests regarding Chinese companies and customers.
Due of these reasons, the company decided to "test" the Chinese market by investing a minority stake in a domestic online auction company. Hence, in 2002, eBay decided to acquire a 33% interest in a domestic online auction called EachNet, China's first online auction website. In its initial days, EachNet was partly acquired and was fully acquired in 2003.
Later, in 2005, eBay decided to acquire Skype in order to expand its presence into the online communication sector. Skype is the pioneering global internet communications company which that offers for anyone with an internet connection to make free phone calls to anyone with an internet connection all over the world. in the same year and beyond Skype's acquisition by eBay, it had made a joint venture with TOM online Inc, China's leading wireless Internet Company.
EBay could forsee a huge and logical opportunity to create a partnership with TOM online Inc. Indeed, by already being a partner with its subsidiary Skype, it was established on the Chinese market and possessed local knowledge and established political connections. EBay saw a solution to remedy to its failing business and to boost development in China
EBay is a global brand founded in September 1995 by Pierre Omidyar in San Jose, California. According to the company's website, http://www.ebay.com/, eBay could be defined as "The World's Online Marketplace, enabling trade on a local, national and international basis. With a diverse and passionate community of individuals and small businesses, eBay offers an online platform where millions of items are traded each day". In other words, the success of eBay is that it has created a virtual platform to individuals where all kinds of goods are bought and sold.

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Sommaire de l'étude de cas

Comprehend the case situation

Defining the problem

Identify the causes

Taking action and following up

Extraits de l'étude de cas

[...] Competition in the Chinese Online Auction Market The Chinese market has seen the number of local auction companies increasing at the beginning of the years 2000. At the time when eBay was eBay EachNet, this increasing number of domestic competitors has caused many troubles to the company regarding its market position. The fact is that these local rivals have taken more and more power on the Chinese domestic market, which has caused eBay EachNet's market share declining. eBay EachNet's most dangerous competitor was in fact TaoBao, a subsidiary of Alibaba. [...]

[...] Indeed its market share has gone to its main competitor TaoBao because of its incompatibility with the Chinese market. Part IV. Taking action and following up To remedy to eBay's failure in the Chinese market and especially with its joint venture with EachNet, the company became to be interested for one of Skype's partner TOM online Inc. Indeed, by already being a partner of its subsidiary Skype, established on the Chinese market and having the local knowledge and political connections, eBay saw there the solution to remedy to its failing business and development in China. [...]

[...] No trust or relationships had been established between the buyers and the sellers regarding transactions or delivery terms. So, at this time companies have really neglected the building of relationship and trust in order to reassure customers to buy on their website for example. Over the previous causes we have cited we could also talk about some technical factors that have played a role in the dotcom crash. Indeed, dotcom companies have met problems like web server interruptions, connection problems and poor webpage design like slow loading time, pop-up distractions or even incompatibility with users. [...]

[...] However this factor does not explain completely eBay EachNet's failure on the Chinese market. According to the China Market Research Group, customers switch from eBay EachNet to TaoBao because they were looking for famous international retailers that were for a long time established on the Chinese market, rather than new established companies in China because customers had more trust in these long established companies. In fact, in China trust has a very high importance and highly influences Chinese' daily decisions. [...]

[...] In order to pursue its global development, the company decided to tap the Chinese market. However from the very beginning the company has met problems in order to establish its presence on this market and benefit from the growing Chinese middle-class market. The main problem in this case is that eBay met problems since the beginning on the Chinese market and that it has difficulties to find the right strategy to succeed on this market. Indeed, at the time eBay decided to enter the Chinese market, the Chinese market was facing a dotcom crash. [...]